When the news broke a few weeks ago that Deborah Seifert, CEO of Philanthropy Australia, had resigned after being in the post barely two years I was really surprised. I was even more surprised when it was announced more or less simultaneously that the Director of ArtSupport Australia, Louise Walsh, would be stepping into her shoes. After initially being a little bit puzzled at the seamlessness of it all, I began to think about the possibilities that having Louise at the helm might represent and things felt quite positive. Interesting, even.

But what has unfolded this past couple of weeks has left me a little cold. I really don’t know what to make of it all. Which is not being helped by the fact that PA is revealing nothing to its membership. Where is the communication? Where is the transparency? Consequently the rumour mill is running wild and people are not happy about the whole situation. Certainly, if the rumours are true there are big changes on the horizon which, if they are to be accepted, need to be managed (which they haven’t to date). And so, what was an air of possibility has now become a distinctly bad smell.

All this and then the Opposition’s opposition to the ACNC. Obviously I can’t pretend to know the whole of the NFP sector, but what I can say is that I haven’t heard the same wide-ranging doubts and concerns that Kevin Andrews, Liberal spokesman for families, housing and human services was recently quoted by Fairfax Media as having heard. However if there are doubts and misgivings, it’d be great to hear them….

You may have seen a couple of articles run in the Sydney Morning Herald a fortnight ago examining the administration and transparency of some of Australia’s better-known celebrity foundations. In the firing line were the McGrath Foundation, The Shane Warne Foundation, the Cathy Freeman Foundation and others. The journalists rightly point out a number of inconsistencies regarding the required public transparency of the non-profit sector here in Australia. Both articles contend that without adequate transparency the donating public can never know how much of their dollar is actually making it to their cause of concern.

The inconsistencies raised in the articles are nothing new to non-profits. The sector has long struggled under the burden of a fragmented regulatory system and been crippled under the red tape of multiple compliance obligations. It’s hoped that the establishment of the Australian Charities and Non-profit Commission (ACNC) will help to reduce the burden on the non-profit sector while providing a new level of transparency sector wide.

What the two articles also helped to highlight was that there continues to be a lack of wider public understanding around administration costs in the non-profit sector. Held up for high praise were those organisations with the bare minimum of administration costs, while those with professional staff and overheads were the inferred to be less effective and somehow less impressive.

It might well be that those organisations highlighted in the article are ineffective but examining administration and fundraising costs will only paint a partial and sometimes misleading picture.

I’ve worked for a grantmaking organisation that was incredibly strong on applicant organisations submitting ‘real world’ budgets. A budget submitted without a provision for administration costs and contingencies was considered poor, full stop. Administration costs were considered realistic if they were in the 8%-25% field (depending on the project type). Any lower or higher and it deserved some prodding. Equally, it was considered poor project management if an applicant didn’t factor at least 10% of the total project costs for contingency costs.

For that particular grantmaking organisation, low administration costs increased the risk of the project operating at the margins, which in turn increased the risk of the project failing. As a grantmaker they decided to mitigate against that risk. When I called organistions to ask why they had submitted application budgets with low or no administration costs their responses were generally the same – most thought putting the actual administration costs in the budget would reduce their chances of success with the grantmaker.

I’m reluctant to suggest that there is any ‘right’ range for administration fees. What’s really important is that donors examine the administration figures within the context of the organisation’s activities and mission. There is no one rule. As a donor you need to be more savvy and a donating public we need to expect that administration costs are a reality for charities.

I’d also encourage donors to recognise that staff within the non-profit sector deserve to be adequately reimbursed for the work they do. One of the great tragedies of non-profit sector is our high staff turn-over, and inadequate remuneration is partly to blame. Working in the most challenging of areas, doing the toughest of work, it’s imperative that the non-profit sector hold on to good staff. That includes senior managers and CEOs whose leadership is so valuable in ensuring the ship is pointing in the right direction.

I hinted in a recent blog that there was growing talk in the philanthropic sector about the need for increased transparency. At the recent Philanthropy Australia AGM, President Bruce Bonyhady AM, ended his yearly review asking philanthropy to look more closely at the role it plays in society. Two things stood out to me in Bruce’s speech, first was his belief that philanthropy could play a greater role in the advocacy space and second was that the sector needed to find more ways to be transparent. Both issues, that of advocacy and transparency, are important areas for consideration in Australian philanthropy today. We’ll be tackling both in upcoming blogs and today I’ll kick us off we a few thoughts on transparency.

The timing is right for Philanthropy Australia to push the need for greater transparency among trusts and foundations and not simply because so many are working to solve the same problems. With the announcement of the formation of the The Australian Charities and Not-for-Profit Commission (ACNC) it is likely that we will see increased government interest in way the philanthropic sector is distributing its funds. Already established are minimum distribution requirements for private ancillary funds and a move to see the same placed on all their public ancillary counterparts. But to be honest, if the extending reach of government is the only incentive driving philanthropic transparency in Australia then we as a sector should probably be a little concerned.

The concept of ‘Open Philanthropy’ in the United States has been driving forward some interesting thinking and incentivising transparency in unique ways. The wonderful Lucy Bernholz (you must follow her blog) shared her modest manifesto on open philanthropy early last year and it really struck a chord with me at the time. Transparency improves our ability to address problems through the sharing of data, successes and failures but like all things in philanthropy the ‘how’ can be the really important bit.

The ‘how’ of transparency is something that the Foundation Center in the US has been looking closely at via the Glasspockets Initiative. The principle behind Glasspockets is, in the words of Janet Camarena, the Foundation Center’s project lead, “all about creating a culture of transparency within foundations”. But in this digital age transparent philanthropy is no longer simply about sharing how much we fund, it’s about how we communicate openly with each other and the broader public. Glasspockets is a true resource for the community and grantmkers alike, providing functions such as a Heat Map showing the frequency with which information is shared by foundations and a tool allowing foundations to submit and post grant data electronically in near real-time (called eGrant Reporting). Both functionalities are potentially important tools for grantmakers and the broader community, actively informing and mapping where philanthropy is working, who its engaging with and how engaged that conversation is with people at the coalface.

When I see the potential of initiatives such as Glasspockets for grantmaking I get a little excited. Imagine the possibilities. Imagine the potential for real collaboration and informed giving! We need to move away from a belief that transparency in philanthropy is simply about better reporting to government and the public via tax returns and annual reports. I get the feeling that if the incentives are right for increased transparency in Australian philanthropy then the results could be game changing. But an investment needs to be made by philanthropy into itself, and the capacity of the sector, in order to undertake these initiatives and really drive them forward. I hope that this active transparency model is something the ACNC and Philanthropy Australia encourage among funders.